Approximately 300 biotechnology, pharmaceutical, equipment, biofuels and medical device companies are based in Virginia, mainly clustered around universities in Blacksburg, Charlottesville, Richmond, Norfolk and Northern Virginia. This blog is an informal diary of what is going on with the industry in Virginia. Opinions here are those of the posters and not necessarily shared by Virginia Bio.

He's explained protein structures and how they work. He's reviewed how drugs are absorbed into the body.

If lawmakers understand the difference between chemical and biologic drugs, Allan reasons, they'll be more invested in his cause: getting quick approval for generic biotech drugs. Today the generics market for chemical drugs like aspirin is booming, but there is no way to get cheaper copies of pricey biologics, for complex life-threatening diseases like cancer, into patients' hands.

Allan, who has worked in the drug industry for 28 years, has a lot at stake. As chief executive of Insmed -- a small Richmond biotech whose goal is to be the first U.S. company to develop a portfolio of biotech generics, or "biosimilars" -- his company's success rides on Congress overhauling the laws to permit competition that would result in lower biologic drug prices.

"You have to talk to people and educate people to expand the possibilities in this field," he said.

The difference between chemical and biologic drugs lies in manufacturing. Chemical drugs are small, simple molecules. Because these drugs are made with tightly controlled chemical recipes, a lab test can easily confirm that a generic such as acetaminophen is identical to the original product Tylenol.

Biologics are much larger and more complex. Biotech companies manipulate living cells into mini-factories to produce the desired molecules for drugs. Any divergence in production processes can change the entire function of the product, potentially jeopardizing patient safety. It's impossible to create perfectly identical products -- hence the term biosimilar -- and tricky to compare divergences.

Last month, Insmed demonstrated that its version of Neupogen, which stimulates white blood cell growth, was equivalent in 32 healthy volunteers to the original product from Amgen. But, for Insmed's version, there is no pathway for approval. And some argue the process should be different than for chemical drugs.

"With a biosimilar, that's not enough," said Andrew Fox, Amgen's director of regulatory affairs. "You need to go into larger trials for safety and efficacy. Insmed's limited data appeared to be good data. However, bioequivalence testing in healthy volunteers does not provide the necessary data on how the biologic actually works in the body, which can only be determined through more extensive clinical testing in patients where safety and efficacy are evaluated."

Two decades ago, as prices for chemical drugs skyrocketed, Congress passed the Hatch-Waxman Act, which opened the doors for generic competition after patent expiration. Once a company demonstrates that its generic is chemically identical to a brand-name drug, it can use the approval of the brand-name drug as evidence that its copycat works just as well without additional human trials.

When the Hatch-Waxman Act passed, the biotech industry was young, and lawmakers didn't think to give the Food and Drug Administration an abbreviated review process to swiftly approve biosimilars. Now, escalating health-care expenditures have prompted Congress to consider one. Last year, two bills were introduced into the House and are still pending. Then, in March, representatives drafted yet another.

A recent Congressional Budget Office analysis of a Senate bill, which passed unanimously last year in committee, found that biosimilar competition would reduce expenditures on biologics by about $200 million by 2013 and about $25 billion by 2018. These savings would represent about 0.5 percent of national spending on prescription drugs, at wholesale prices, over the next decade.

The main point of contention among these bills: the length of an innovator company's "data exclusivity." Not to be confused with patents, data exclusivity is the period after the FDA approves a product during which an imitator can't rely on the innovator's clinical data for safety and effectiveness. It can run during and longer than the period of patent protection.

Insmed, along with consumer groups such as AARP and the National Organization for Rare Disorders, are lobbying for five years, the same length as chemical drug data exclusivity, to get cheaper drugs to patients sooner and spur biosimilar growth.

"These types of drugs make an enormous amount of money," Allan said regarding a longer period. "If generics come into the marketplace, it'll eradicate the monopoly. Let's be clear. This is all about protecting monopoly."

Established companies deny such a motive.

"We've always supported a pathway," said Genentech spokeswoman Megan Pace. "We just want to make sure patient safety and data protection for innovators will be a part of the bill."

Because biosimilars aren't exact duplicates of the original drugs, they don't violate the original drug's patent, enabling legal distribution before patent expiration. As a result, the Biotechnology Industry Organization, as well as the handful of biotechs that control most of the market, supports a 14-year period to allow companies to recoup their investment and conduct further clinical trials to improve the product.

"The biologics industry, even now, is largely made up of small companies that are losing money," said Sara Radcliffe, the organization's vice president of science and regulatory affairs.

And because biosimilars aren't perfect copies, patients rights groups and biotechs are asserting that patients should not be forced to take them. It is up the discretion of individual physicians, not insurance companies or pharmacies, to substitute a branded biologic for a biosimilar, they said.

Substitution has been slow in the European Union, where patients already have access to these drugs. In the first six months of introducing Omnitrope, a biosimilar growth hormone, in France, about 20 percent of new patients requiring the hormone took the biosimilar under doctors' advice, said Andreas Rummelt, chief executive of Sandoz, the generic division of Swiss drugmaker Novartis.

Last month Insmed, a spinout from the University of Virginia, brought on Bill Thomas, the former chairman of the House Ways and Means Committee, to aid its lobbying as a strategic adviser. Thomas, who played a key role in creating Medicare Part D prescription drug coverage for seniors, was intrigued by the company's progress in duplicating Neupogen.

"You don't have to create hypothetical," Thomas said. "Insmed is real. You want to say yes to these people or no to these people."

Thomas said he is doing what he can to help move legislation by the end of this Congress.

"People are waiting for us to do our job," Thomas said. "If we don't, we'll be buying European or Asian products when we could be buying American products produced by Americans."

Biotech drugs are the money-makers in today's drug market. Global prescription sales of biotech drugs increased 12.5 percent in 2007 -- nearly double the rate of the overall pharmaceutical market, which includes the biotech sector -- to more than $75 billion, according to a June report by IMS Health, a health-care information company.

Neupogen generated $1.3 billion in worldwide sales last year.

Insmed certainly isn't alone. Large European pharmaceutical companies are already selling biosimilars in Europe. There are also smaller U.S. companies, such as Hospira in Lake Forest, Ill., breaking in. But the complexity of these biologics guarantees that few companies have the resources to jump into the market.

Insmed's research and development has increased, totaling $10.8 million for the first half of this year, as it continues to develop biosimilars and innovator drugs at its facility in Boulder, Colo. The company posted a loss of $9.5 million for the quarter ended June 30.

But the potential market is big. Four of the six FDA-approved drugs for multiple sclerosis are biologics. Treatment can cost a patient more than $30,000 a year, prohibiting many from obtaining drugs, said Shawn O'Neail, an associate vice president at the National MS Society.